Pepsi adds fizz to profits season

Pepsi: Predicting 13-15% earnings growth, despite competition

Sodas-to-cereal giant PepsiCo has lifted the cloud over corporate earnings, reporting a 14% rise in profits and predicting further progress next year.

PepsiCo, the world's fifth largest food and drinks company, announced underlying profits of $866m in the July-to-September quarter.

The result, equivalent to $0.48 per share, was at the upper end of Wall Street forecasts and compared with effective earnings of $759m a year before, if figure from acquired cereals and Gatorade firm Quaker are included.

PepsiCo also forecast 13-14% earnings next year, cheering Wall Street traders amid a results season overcast both by the US economic slowdown and the after-affects of the 11 September attacks.

Mobile phone giant Motorola earlier on Wednesday joined companies forecasting a loss this year.

But PepsiCo, while declining to comment specifically on the implications of the terror strikes, said it had yet to note any affects on trade.

"We have not seen any revenue momentum slowing," chairman and chief executive Steve Reinemund said, adding that PepsiCo retained scope for reacting to any trade slide.

"If... we had a slight slowdown at the top line, we are comfortable that we could make the necessary adjustments to deliver our forecasted profit."

Snack happy

Overall, Wednesday's profits statement showed that, including $248m costs associated with integrating Quaker, PepsiCo lost $627m during the quarter.

But Wall Street analysts took cheer at the firm's underlying performance.

"Going forward, I am increasingly confident and comfortable with the [earnings] story," said Simon Burton, senior consumer staples analyst at Banc of America Capital Management.

"They have got a great management team and they keep hitting their targets."

JP Morgan analyst John Faucher saw PepsiCo's salty snacks business, the firm's largest unit, driving future growth.

"That is where they have the most leverage," he said. "It is still going to have to come from snacks."

On Wall Street, PepsiCo shares ended up $0.96 at $49.89.